BLUEPRINT TO HOME BUYING SUCCESS
BLUEPRINT TO HOME BUYING SUCCESS
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Thank you for the opportunity to let us represent you in the purchase of your new home. We think of our clients as individuals with specific needs. With this in mind, our team will strive to give you exceptional service. In response to the more challenging market we have experienced over the years, we have become more determined and assertive with marketing and technology. This has allowed us to be very successful in securing results for our clients.
This is absolutely the very best time to be a buyer. Timing is everything and here are 4 reasons to confirm your decision to buy:
|1||Interest rates are at historic lows. Expect to get a great mortgage with an attractive rate.|
|2||Prices are still low and you are buying into an appreciating market.|
|3||Sellers are motivated to get their homes sold as more inventory is coming on the market.|
|4||The first step to purchasing a home is to select the right Realtor to effectively and profitably represent your interests.|
The Home Buying Process
Step 1 – Is now the right time?
- How long are you planning on living in your next home?
- Consider the benefits/drawbacks to owning a home.
Step 2 – Get pre-approved for a mortgage
- How much can you afford?
- What are the different loan programs available? (FHA, VA, Conventional)
- Make sure your credit is in good shape.
Step 3 – Find your dream home
- What kind of home do you want? (Detached, Attached, Condo etc.)
- How many bedrooms and bathrooms?
- Are school districts important?
Step 4 – The escrow process
- The home inspection
- Reviewing disclosures
- Ordering the appraisal
- Secure financing
Step 5 – Closing
- The final walk-through
- Schedule the move
- Changing over utilities
Preparing For The Lender
- Full names of all purchasers as they are to appear on title.
- Social security numbers of all purchasers.
- Present residence address of all purchasers.
- Previous address for all purchasers going back two years if they have not resided in the present home for two years.
- Home, office and cell phone numbers, and email address.
- Present Employer: Name, address and a contact person to send the employment verification form.
- Explanation for any gap during preceding 2-year employment history.
- Relocation letter for any transferees – giving date, salary, new location, and any relocation benefits.
- Previous Employer: name, address, and a contact person, going back 2 years if not in present job for 2 years.
- Present Salary: Year-to-date pay stub and last 2 years’ W-2’s.
- If any variable income, commission, part-time income, bonus, overtime, interest income, etc., is being used to qualify: 2 years’ signed federal tax returns and W-2’s and/or 1099’s.
- If self-employed: 2 years’ signed federal individual and corporate returns (if applicable). Also a profit and loss statement and balance sheet.
- Diploma or transcript if a student during preceding 2-year period.
- Rental Income: Copy of lease which is current and at least one year in length.
- Alimony and Child Support (only if used for qualification): Copy of divorce decree and property settlement (ratified) setting out terms. Proof of payment will also be requested at application.
- Income from Notes Held: A copy of the ratified note.
- Retirement, Social Security and Disability Income: Copy of award letter and latest check showing amount of present payment. Copy of end of year statement if applicable.
- Bank Accounts: Name of bank, address, account numbers, types of accounts and present balances. With checking accounts, use average balances.
- Copy of two most recent statements of all accounts.
- Stocks and Bonds: Copy of certificates or copy of recent (within 30 days) broker statement listing the holdings.
- Life Insurance: Cash value, only if being used for down payment.
- Vehicles: Year, make and value. Copy of title if under 4 years old with no outstanding lien.
- Real Estate: Address and market value. If free and clear, deed of release, deed or mortgage payoff.
- Present Home: Copy of sales contract, settlement sheet and/or lease.
- Gift Letter: Form to be provided by financial representative. Donor capacity must be verified. Receipt of funds must be shown in account.
- Credit Cards: Account numbers and outstanding balances.
- Loans (Auto, Mortgage, Personal, Student, etc.): Name of institution, address, account numbers, outstanding balances, monthly payments, months left on loan. Copy of next payment coupon. 12-months’ statements or canceled checks for present mortgage.
- Alimony and Child Support: Copy of Ratified Decree and property settlement setting out terms.
- Certificate of Eligibility: To obtain certificate, you will need a DD-214 (Separation of Service) or of in the Service, you will need a Statement of Service signed by a Commanding Officer or Personnel Officer (certificate must be updated prior to application).
- If in Service, you will need Authorization to Live Off Base (DD-1717 from Housing Office) and Transfer Orders (if applicable).
Do’s & Don’ts During the Loan Process
There are certain “Do’s & Don’ts” which may affect the outcome of your loan request. These remain in effect before, during and after the loan approval, up until the time of settlement when your loan is funded and recorded. Many times credit, income, and assets are verified just before you have signed your final loan documents. Here is a list you should comply with:
MAKE SURE THAT YOU DO NOT:
Do any of the things that may alter your credit and may risk you obtaining your loan. Also, these things may put you in default of your Sales Contract, may put your ESCROW deposit at risk, and may put you at risk of being sued.
DO NOT quit your job or change jobs. If this is likely, consult with your loan officer and call this office should this occur.
DO NOT allow anyone to make an inquiry on your credit report except your lender.
DO NOT apply for credit anywhere else except with your lender. This causes more “hits” on your credit rating which can reduce your credit score.
DO NOT change bank accounts or transfer money within your existing accounts.
DO NOT co-sign for anyone, for any reason, for anything.
DO NOT purchase or attempt to purchase anything else on credit such as another car, truck, boat, furniture or other real estate.
DO NOT charge any abnormal amounts to your current credit cards or credit lines.
DO NOT send in late payments, or incur late fees for anything.
DO NOT wait longer than the time frame given per your contract to provide all necessary paperwork and information to your lender when requested.
MAKE SURE THAT YOU DO:
DO keep all accounts current, including mortgages, car loans, credit cards, etc.
DO contact both your lender and your sales associates anytime a question may arise.
DO make all payments on or before due dates on all accounts, even if the account is being paid off with your new loan.
DO have any lender-required money/funds to your loan officer within 72 hours after home inspection is complete.
DO return phone calls from your agent, loan officer, settlement company, or anyone else involved in your transaction within 2 hours of a message.
Will Mortgage Pre-Approvals Hurt My Credit Score?
This is a very common myth buyers have regarding getting pre-approved. Getting pre-approved is 100% a benefit to you as the buyer because it will give you confidence to write offers and prevent any heartache down the road. In a competitive market like ours, a good agent and a smart seller will not even consider looking at a financed offer without a preapproval letter.
CREDIT BUREAU SCORING
Credit bureaus use a subtle formula that they don’t publicize as to how they crunch your credit history down into a single credit score. One of things that can cost you points on your credit score is to have a bunch of inquiries coming in very close to each other. So, should you worry about what mortgage pre-approvals will do to your credit reports? Probably not. The “ding” for one inquiry is very small.
The most a single inquiry on your credit report will cost you is a few points. Often, your score, which can range from 300 to 850, will suffer even less than that. Unless you are seeking a new mortgage and are right on the cusp between a good credit score and a fair credit score, five points shouldn’t make that much difference in your loan terms.
MAKING THE MORTGAGE PROCESS EASIER
All of the credit bureaus understand the complex timing of getting a mortgage. Therefore, they have instituted measures to avoid reflecting pre-approval inquiries on credit reports. For instance, if you are shopping around for the best rate, and several mortgage companies make credit inquiries about you within 45 days of each other, all of those inquiries will be bundled into a single event with a minuscule effect on your credit report. Your credit report also does not include any credit inquiries made within 30 days prior to your loan application. It is, therefore, nearly impossible that the mortgage process of pre-approval will cause enough damage to your credit score to hurt your mortgage terms, so don’t worry if your real estate agent asks to see your letter of pre-approval. Getting pre-approved for the mortgage you want wont hurt you.
Buyer Plan of Action
In this market it takes a proactive and aggressive approach to find you the best home at the best price. Every buyer has access to the homes for sale in the Multiple Listing Service through various free websites such as Zillow or Trulia or Realtor.com. The reason why more buyers choose to work with us than any other agent is what we go above and beyond the multiple listing service to find our clients the best deals.
Door Knocking – One of the best ways we find our clients a great home not yet on the market is we constantly door knock through the specific area that you as the buyer would like to live. We come across many potential sellers this way or a neighbor who knows of someone that would like to sell their home.
Telephone Prospecting – Similar to door knocking, once you as the buyer identify the area you want to live in we will also call through those neighborhoods looking for potential sellers who are not yet on the market.
Expired and Cancelled Listings – These are homes that were on the market at some point in the past 3 years and for whatever reason did not sell. Often times these sellers would still like to sell their home without having to go through the hassle of fully marketing their home.
Database – We have an extensive database of clients who we actively keep in communication with, and have many clients who with the right buyer would be happy to sell their home, without having to go through the hassle of having their home on the market.
What To Expect From This Market
Navigating this market can be very complex at times. In your search for a home you mostly come across three different types of sellers. Each one will have different escrow timeframes, negotiation styles, pricing strategies, and timeframes for accepting your offer. Without knowing the different characteristics of the different types of sellers it can be very frustrating out there as a buyer.
Traditional Sales – These are sellers who have equity in their homes and are usually looking to close escrow in 30-45 days. When writing an offer on a traditional sale you will usually negotiate directly with the seller through their agent.
Short Sales – These are sellers who owe more that what they can sell their homes for and therefore have to negotiate with their bank to receive a lesser amount. Typically the negotiation process with the bank can take 4-6 months to get an offer approved and the price is subject to change during this time.
Foreclosures – These are the homes which have been foreclosed on and taken back by the bank also known as REO’s (Real Estate Owned) or “bank owned”. Like the traditional sale, the bank will want to close escrow within 30 days upon accepting your offer. The banks are motivated to sell these homes quickly and will typically price them slightly below market value to get multiple offers and create a bidding war to drive the price up. Even though you may pay over the asking price, these can still be a great value.
What to Expect When Writing An Offer
Here are some things to consider to ensure your offer gets accepted:
What type of sale is it?
- Foreclosure, Short Sale, Traditional Sale.
Is it priced right for the market?
- What is the buyer activity?
- Are there offers on the home?
- What other homes are for sale in the neighborhood?
- What has sold recently in the area?
- How long has it been on the market?
What is the seller’s motivation?
- Are they price driven or are there other terms that are important to them such as a lease after sale?
- How long of an escrow period are they looking for?
Do you need concessions for closing costs?
- Closing costs such as title, escrow, and lender fees usually cost between 1-3% of the sales price.
Are there multiple offers on the property?
- This is not uncommon for homes priced right for the market and in great condition.
- Oftentimes the seller will ask you for your “highest & best” offer. In other words, what is the highest price you will offer that if another buyer offered more, you would not have any regrets because you gave it your best shot.